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HomeMy WebLinkAboutOrdinance Book 18, Page 544, Ordinance Number 74-4-962ORDINANCE NO. 74-4-962 BOND ORDINANCE CITY OF PADUCAH, KENTUCKY AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, AUTHORIZING AND PROVIDING FOR THE ISSUANCE AND SALE OF ONE MILLION, THREE HUNDRED FORTY THOUSAND DOLLARS ($1,340,000) PRINCIPAL AMOUNT OF CITY OF PADUCAH SEWER SYSTEM REVENUE BONDS, SERIES OF 1974, DATED APRIL 1, 1974, UNDER THE PROVISIONS OF SECTION 94.160 AND SECTIONS 96.350 TO 96.510, INCLUSIVE, OF THE KENTUCKY REVISED STATUTES, FOR THE PURPOSE OF DEFRAYING THE COST OF EXTENSIONS, ADDITIONS AND IMPROVEMENTS TO THE MUNICIPAL SEWER SYSTEM; PROVIDING FOR SAID BONDS TO RANK ON A PARITY WITH THE OUTSTANDING $415,000 OF CITY OF PADUCAH SEWER SYSTEM REVENUE BONDS OF 1965; SETTING FORTH THE TERMS AND CONDITIONS UPON WHICH SAID $1,340,000 OF BONDS DATED APRIL 1, 1974, ARE TO BE AND MAY BE ISSUED AND OUTSTANDING; AND PROVIDING FOR THE COLLECTION, SEGREGATION AND DISTRIBUTION OF THE REVENUES OF SAID MUNICIPAL SEWER SYSTEM. WHEREAS, the City of Paducah, a second class city, in McCracken County, Kentucky, presently owns and operates the municipal sewer system in said City, and WHEREAS, by a certain Ordinance adopted on July 20, 1965 (the "1965 Bond Ordinance"), the Board of Commissioners of said City authorized the issuance of $600, 000 of City of Paducah Sewer System Revenue Bonds of 1965, dated August 1, 1965 (the "Bonds of 1965") , for the purpose of defraying the cost (not otherwise provided) of constructing extensions, additions and improvements to the municipal sewer system of the City, and WHEREAS, there are now outstanding $415,000 of said Bonds of 1965, scheduled to mature on January 1, in each of the respective years, 1975 through 1986, inclusive, and same are the only present obligations constituting an encum- brance against said sewer system, and WHEREAS, said $415,000 of Bonds of 1965 by their terms are payable from and secured by a first pledge of the income and revenues from the operation of said municipal sewer system of said City, and all of said Bonds presently outstanding are current as to payments of both principal and interest and for the security of which a certain Bond and Interest Redemption Fund (the "Bond Fund of 1965") and certain reserves are being maintained in the amounts and manner as prescribed by said 1965 Bond Ordinance pursuant to which said Bonds of 1965 were issued and are presently outstanding, and ' WHEREAS, in and by said 1965 Bond Ordinance, the right and privilege were reserved by said City under conditions and restrictions therein set out, of issuing additional bonds from time to time, payable from the income and revenues of said system and ranking on a parity with said outstanding Bonds of 1965, for the purpose, among other things, of constructing extensions, additions and improvements to said system, which conditions and restrictions are found to currently exist and prevail so as to permit the issuance of such additional bonds in the amount of $1,340,000, as herein- after authorized, and ranking on a parity with said outstanding $415,000 of Bonds of 1965, and WHEREAS, it is deemed advisable and for the best interest of the City that the Board of Commissioners authorize the issuance and sale of $1,340,000 of City of Paducah Sewer System Revenue Bonds, Series of 1974, dated April 1, 1974, for the purpose of defraying the cost (not otherwise provided) of constructing extensions, additions and improvements to the existing municipal sewer system, the proceeds of which Bonds of 1974 will be supplemented by the proceeds of an approved Federal EPA Grant in the amount of approximately $1,108,500 for said purposes, and WHEREAS, under the provisions of Section 94.160 and Sections 96.350 to 96.510, inclusive, of the Kentucky Revised Statutes, and under the provisions of said 1965 Bond Ordinance, said City is authorized to issue said Bonds to provide such funds for the purpose aforesaid. NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE CITY OF PADUCAH, KENTUCKY, DOES ORDAIN AS FOLLOWS: SECTION 1. DEFINITIONS. As used in this Ordinance, unless the context requires otherwise: (a) "Bonds of 1965" refers to the outstanding $415,000 of Bonds of said original authorized $600,000 of City of Paducah Sewer System Revenue Bonds of 1965, dated August 1, 1965. (b) 111965 Bond Ordinance" refers to said Ordinance authorizing said Bonds of 1965, which Ordinance was enacted on July 20, 1965. (c) "Bonds of 1974" refers to the $1,340,000 of City of Paducah Sewer System Revenue Bonds. Series of 1974, dated April 1, 1974, authorized herein. (d) "1974 Bond Ordinance" refers to this Ordinance authorizing said Bonds of 1974. (e) 'Bond Fund of 1965" refers to the "Paducah Sewer System Bond and Interest Redemption Fund," created in said 1965 Bond Ordinance. (f) "Debt Service Reserve," refers to the "Paducah Sewer System Debt Service Reserve" created as a part of said Bond Fund of 1965 in said 1965 Bond Ordinance. (g) "Construction project" or "1974 construction project" refers to the proposed extensions, additions and improvements to the municipal sewer system of said City, the cost of which construction project is being financed by the Bonds of 1974, said extensions, additions and improvements consisting of a new sewage treatment plant, together with appurtenant facilities. (h) "Sewer system" or "system" refers to the municipal sewer system of the City. SECTION 2. CONSTRUCTION AWARD APPROVED; {YORK AUTHORIZED. The Board of Commissioners hereby authorizes, approves, ratifies and con- firms its previous action in awarding the contracts for the construction of said 1974 construction project, to the lowest and best bidders and further approves the action of the City officials in entering into formal contracts with said bidders, subject to the necessary approvals being obtained. Authority is hereby given for undertaldng the construction of said construction project according to the plans and specifications heretofore prepared for the City, after all necessary approvals have been obtained. SECTION 3. AUTHORIZATION OF BONDS. For the purpose of defraying the cost (not otherwise provided) of said 1974 construction project, there are hereby authorized to be presently issued and sold One Million, Three Hundred Forty Thousand Dollars ($1,340,000) principal amount of City of Paducah Sewer System Revenue Bonds, Series of 1974, dated and bearing interest from April 1, 1974, payable semi-annually, except that the first interest coupon shall represent nine months' interest falling due on January 1, 1975, consisting to two hundred sixty-eight (268) Bonds of the denomination of $5,000 each, numbered from 1 to 268, inclusive. Said $1,340,000 of Bonds shall bear interest payable semi-annually, at a coupon rate or rates not exceeding seven percent (7%) per annum, the exact rate or rates to be fixed by supplemental Resolution as a result of the advertised sale of said Bonds, and said Bonds shall mature serially and in numerical order on January first in each of the respective years as set out below. The numbering, maturities and principal and interest requirements of said $1,340,000 of Bonds, based on a tentatively anticipated interest rate of five and three-fourths percent (5-3/4%) per annum, shown as the requirements for the calendar year preceding and including the January 1 principal maturity of each year, are as follows: SECTION 4. BONDS SUBJECT TO REDEMPTION. Bonds of 1974 maturing on and after January 1, 1985, shall be subject to redemption by said City prior to maturity, on any interest payment date falling on or after July 1, 1984, in accordance with the provisions contained in the bond form set out in Section 7 below. SECTION 5. PLACE OF PAYMENT AND MANNER OF EXECUTION. Both principal and interest of said Bonds of 1974 shall be payable at The Paducah Bank & Trust Company, Paducah, Kentucky, in lawful money of the United States of America. Said Bonds of 1974 shall be executed on behalf of said City with the duly authorized reproduced facsimile signature of the Mayor of said City, and the duly authorized reproduced facsimile of its corporate seal shall be imprinted thereon, attested by the manual signature of its City Clerk, and the interest coupons attached to said Bonds shall be executed with the duly authorized reproduced facsimile signa- ture of said Mayor and said City Clerk; and said officials, by the execution of appropriate certifications, shall adopt as and for their own proper signatures their respective facsimile signatures on said Bonds and coupons. Tentative Tentative Estimated Estimated Total Interest Principal Maturity Requirements and Interest January 1, Principal Numbering (5-3/4$) Requirements 1975 -0- --- $57,787 $ 57,787 1976 $ 20,000 1-4 77,050 97,050 1977 20,000 5-8 75,900 95,900 1978 20,000 9-12 74,750 94,750 1979 20,000 13-16 73.600 93,600 1980 20,000 17-20 72,450 92,450 1981 25,000 21-25 71,300 96,300 1982 25,000 26-30 69,862 94,862 1983 25,000 31-35 68,425 93,425 1984 25,000 36-40 66,987 91,987 1985 30,000 41-46 65,550 95,550 1986 30,000 47-52 63,825 93,825 1987 30,000 53-58 62,100 92,100 1988 75,000 59-73 60,375 135.375 1989 80,000 74-89 56,062 136,062 1990 85,000 90-106 51,462 136,462 1991 90,000 107-124 46,575 136,575 1992 95,000 125-143 41,400 136,400 1993 100,000 144-163 35,937 135.937 1994 100,000 164-183 30,187 130,187 1995 100,000 184-203 24,437 124,437 1996 100,000 204-223 18,687 118,687 1997 100,000 224-243 12,937 112,937 1998 125,000 244-268 7,187 132,187 SECTION 4. BONDS SUBJECT TO REDEMPTION. Bonds of 1974 maturing on and after January 1, 1985, shall be subject to redemption by said City prior to maturity, on any interest payment date falling on or after July 1, 1984, in accordance with the provisions contained in the bond form set out in Section 7 below. SECTION 5. PLACE OF PAYMENT AND MANNER OF EXECUTION. Both principal and interest of said Bonds of 1974 shall be payable at The Paducah Bank & Trust Company, Paducah, Kentucky, in lawful money of the United States of America. Said Bonds of 1974 shall be executed on behalf of said City with the duly authorized reproduced facsimile signature of the Mayor of said City, and the duly authorized reproduced facsimile of its corporate seal shall be imprinted thereon, attested by the manual signature of its City Clerk, and the interest coupons attached to said Bonds shall be executed with the duly authorized reproduced facsimile signa- ture of said Mayor and said City Clerk; and said officials, by the execution of appropriate certifications, shall adopt as and for their own proper signatures their respective facsimile signatures on said Bonds and coupons. SECTION 6. BONDS PAYABLE OUT OF REVENUES AND SECURED BY STATUTORY MORTGAGE LIEN. All of said Bonds of 1974, with interest thereon, and any additional parity bonds that may be issued and outstanding under the conditions and restrictions of said 1965 Bond Ordinance and of this 1974 Bond Ordinance, are to be issued in anticipation of the revenues to be derived from the operation of said sewer system, all as herein- after more specifically provided, shall be payable out of the Bond Fund of 1965, created in said 1965 Bond Ordinance, on a parity basis with said Bonds of 1965, and shall be a valid claim of the holders thereof against said Fund and against a sufficient portion of the gross revenues of said sewer system of the City pledged to said Fund. All of said Bonds of 1974, together with said Bonds of 1965, and any additional parity bonds shall be and are further secured by a statutory mortgage lien against said sewer system, and appurtenant facilities, together with all future extensions, additions and improvements thereto, on a parity basis, as provided in said 1965 Bond Ordinance. SECTION 7. BOND FORM. Said Bonds of 1974 and the appurtenant Goupons khall be in substantially the following form, with ap'p'r8piat�7in�>rRi6Y7sAon:`odti9sions as may be consistent with this Ordinance: UNITED STATES OF AMERICA COMMONWEALTH OF KENTUCKY COUNTY OF McCRACKEN CITY OF PADUCAH SEWER SYSTEM REVENUE BONDS SERIES OF 1974 No. $5,000.00 KNOW ALL MEN BY THESE. PRESENTS: That the City of Paducah, in the County of McCracken in the Commonwealth of Kentucky, for value received, hereby promises to pay to the bearer hereof, solely from the special fund hereinafter identified, the sum of FIVE THOUSAND DOLLARS On the first day of January, 19 and to pay interest on said sum from the date hereof at the rate of percent ( %) per annum, payable semi-annually, on the first days of January and July in each year until paid, with the first interest coupon attached hereto representing nine months' interest falling due on January 1, 1975, except as the provisions herein- after set forth with respect to prior redemption may be and become applicable hereto, such interest as may accrue on and prior to the maturity of this Bond to be paid upon presentation and surrender of the annexed interest coupons as the same severally 549 mature, both principal and interest being payable, in lawful money of the United States of America, at The Paducah Bank a Trust Company, Paducah, Kentucky. This Bond is one of a duly authorized series of bonds (said Bonds and the appertaining coupons being hereinafter collectively referred to as the 'Bonds of 197411) in the principal amount of One Million Three Hundred Forty Thousand Dollars ($1,340,000), issued by said City pursuant to an ordinance duly enacted (the "1974 Bond Ordinance") for the purpose of defraying the cost (not otherwise provided) of constructing extensions, additions and improvements to the municipal sewer system of the City, as is more fully identified in said 1974 Bond Ordinance. This Bond and all of the $1,340,000 of Bonds of 1974 rank on a parity as to security and source of payment with $415,000 of outstanding Sewer System Revenue Bonds of 1965, dated August 1, 1965 (the "Bonds of 1965"), authorized by an Ordinance enacted by the Board of Commissioners of said City on July 20, 1965 (the "1965 Bond Ordinance"). Said 1965 Bond Ordinance provided that so long as any of such Bonds of 1965 and/or any bonds ranking on a parity therewith, are outstanding, said municipal sewer system shall be operated as a revenue-producing project within the meaning of Section 94.160 and Sections 96.350 to 96.510, inclusive, of the Kentucky Revised Statutes; and the aforesaid 1974 Bond Ordinance also provides that said municipal server system shall continue to be operated as a revenue-producing project within the meaning of the foregoing so long as any of the bonds of 1965, 1974 and/or any bonds ranking on a parity therewith, are out- standing. These Bonds of 1974 have been issued under and in full compliance with said 1965 Bond Ordinance, said 1974 Bond Ordinance and the Constitution and Statutes of the Commonwealth of Kentucky, including among others, Section 94.160 and Sections 96.350 to 96.510, inclusive, of the Kentucky Revised Statutes, as amended. This Bond shall be payable solely out of the revenues of the sewer system and does not constitute an indebtedness of the City within the meaning of any constitutional provisions or limitations, as provided in Section 94.160 and 96.390 of the Kentucky Revised Statutes. It is provided in and by said 1965 Bond Ordinance and in and by said 1974 Bond Ordinance that additional bonds ranking on a parity with said Bonds of 1965 and with these Bonds of 1974, may be issued and outstanding upon the conditions and restrictions provided in said 1965 Bond Ordinance and in said 1974 Bond Ordinance; and these Bonds of 1974, together with such additional Bonds ranking on a parity therewith as have been heretofore issued and are now outstanding, viz.. said $415, 000 of outstanding Bonds of 1965, and as may be hereafter issued and outstanding from time to time under the parity conditions and restrictions of said 1965 and 1974 Bond Ordinances, and and will continue to be payable from and secured by a first pledge of 550 a fixed portion of the gross income and revenues to be derived from the operation of said sewer system, which fixed portion of said gross income and revenues shall be sufficient to pay the principal of and interest on all of said outstanding Bonds as and when the same become due and payable, and which shall be set aside as a special fund for that purpose and identified as the "Paducah Sewer System Bond and Interest Redemption Fund." These Bonds of 1974, said Bonds of 1965, and any additional parity bonds are further secured by a statutory mortgage lien against said sewer system and appur- tenant facilities, together with all future extensions, additions and improvements thereto, as provided in Sections 94.160 and 96.400 of the Kentucky Revised Statutes. Said City covenants that so long as any Bonds of said Bonds of 1965 and/or of these Bonds of 1974, are outstanding, said sewer system will be continuously operated as a revenue-producing undertaking, and that the City will fix and charge such rates for the services and facilities of said system so that the income and revenues therefrom will be sufficient to pay all of these Bonds of 1974 and said Bonds of 1965 and the interest thereon as the same become due, to pay the cost of operation and maintenance of said system and to provide for the depreciation thereof. Bonds of these Bonds of 1974 falling due on and after January 1, 1985, are subject to redemption by said City prior to maturity, in whole or in part, in the inverse order of their maturities (less than all of a single maturity to be selected by lot), on any interest payment date falling on or after July 1, 1984, upon payment of face amount plus all accrued interest evidenced by interest coupons maturing on and prior to the redemption date, plus a redemption premium expressed in terms of a per- centage of the face amount of the Bonds called for redemption, as follows: 3% if redeemed on or after July 1, 1984, and on or before July 1, 1988; 2% if redeemed thereafter and on or before July 1, 1992; and 1% if redeemed thereafter and prior to final maturity. In the event that any of said Bonds are called for redemption as aforesaid, notice thereof identifying the Bonds to be redeemed shall be given at least once not less than thirty days prior to the redemption date, in a newspaper of general circulation throughout Kentucky and in a financial journal of general circulation among bond buyers published in New York City, New York. All of said Bonds of 1974 as to which said City reserves and exercises the right of redemption and as to which notice as aforesaid shall have been given, and for the retirement of which, upon the terms aforesaid, funds are duly provided, 551 will cease to bear interest on the redemption date. Notice of such redemption may be waived with the written consent of the holder (s) of the Bond (s) so called for redemption. This Bond is exempt from taxation in Kentucky. This Bond and the coupons appertaining hereto are fully negotiable and shall pass by delivery merely. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this Bond and the Bonds of 1974 of which it is one, have existed, have happened and have been performed in due time, form and manner as required by law, that the amount of this Bond, together with all other obligations of said City, does not exceed any limit prescribed by the Constitution or Statutes of the Commonwealth of Kentucky, and that a sufficient portion of the gross income and revenues of said sewer system has been pledged to and will be set aside into said special fund (Paducah Sewer System Bond and Interest Redemption Fund) by said City for the prompt payment of the principal of and interest on this Bond and all of the Bonds of 1974 and on all other bonds ranking on a parity therewith, including those issued heretofore (the Bonds of 1965) and those which may be issued hereafter. IN WITNESS WHEREOF, said City of Paducah, in the Commonwealth of Kentucky, has caused this Bond to be executed with the duly authorized reproduced facsimile signature of its Mayor, and the reproduced facsimile of its corporate seal to be imprinted hereof, attested by the manual signature of its City Clerk, and the coupons hereto attached to be executed with the duly authorized reproduced facsimile signatures of said Mayor and said City Clerk, and this Bond to be dated the first day of April, 1974. CITY OF PADUCAH, KENTUCKY By (Facsimile Signature) ATTEST: Mayor City Clerk (Facsimile Seal of City) (FORM OF COUPON) COUPON NO. $ Unless the Bond to which this coupon appertains is redeemable and accordingly shall have been theretofore called for prior redemption and payment of the redemption price duly made or provided for. On the first day of • 19 The City of Paducah, Kentucky, will pay to the bearer the amount dhown hereon out of its "Paducah Sewer System Bond and Interest Redemption Fund". at The Paducah Bank a Trust Company, Paducah, Kentucky, as provided in and being interest 552 then due on its $5,000 Sewer System Revenue Bond, Series of 1974, dated April 1, 1974, numbered CITY OF PADUCAH, KENTUCKY ATTEST: By (Facsimile Signature Mayor (FacE tiid:&ighature City Clerk SECTION 8. COMPLIANCE WITH PARITY REQUIREMENTS OF EXISTING BOND ORDINANCE. It is hereby certified and declared that prior to the issuance of any of the $1,340,000 of Bonds of 1974 herein authorized, there will have been procured and filed with the City Clerk of said City a statement by an independent State licensed Certified Public Accountant, not in the regular employ of the City on a monthly salary basis, reciting the opinion, based upon necessary investigation, that the annual net revenues of said sewer system for twelve (12) consecutive months out of the preceding eighteen (18) months (when adjusted in conformity with the provisions of Section 11 (iii) of said 1965 Bond Ordinance) were equal to at least one and one-fourth (1..25) times the average annual requirements for principal and interest that will become due in any calendar year for both principal and interest with respect to both the Bonds of 1965 now outstanding and the additional parity Bonds of 1974 now authorized to be issued. The "annual net revenues" referred to above are subject to adjustment reflecting (1) the latest increased schedule of sewer service rates imposed for the services of said sewer system, becoming effective prior to the issuance of the Bonds of 1974, and reflecting also (2) the additional net sewer service revenues to be realized from the proposed extensions, additions and improvements to said sewer system (the 111974 construc- tion project"), the cost of which (not otherwise provided) is to be defrayed through the issuance of the Bonds of 1974, taking into account any increase or decrease of the costs of operating and maintaining the system, such adjustment being based upon and included in a certification of an independent consulting Engineer or firm of Consulting Engineers of national reputation in the field of sanitation engineering, said certification to be attached to and filed with the aforesaid certificate of said Certified Public i accountant. The City further certifies that firm contracts (secured by 100% performance bond) for the acquisition and/or construction of such construction project have been entered into or will have been entered into prior to the issuance of the Bonds of 1974, i herein authorized, establishing that the costs of the proposed construction project will not exceed the cost figures used by the Engineers in making the aforesaid computa- tions, and that appropriate certifications required by said 1965 Bond Ordinance, prior 553 to the issuance of any parity bonds, have been duly filed with the City Clerk or will have been duly filed with such City Clerk prior to the time of issuance of said Bonds of 1974. Accordingly, it is hereby found and declared that the $1,340,000 of Bonds of 1974 hereby authorized shall rank and be payable on a parity with said outstanding $415,000 of Bonds of 1965 referred to above. SECTION 9. PROVISIONS OF BOND ORDINANCE OF 1965 INCORPORATED HEREIN. All proceedings preliminary to and in connection with the issuance of said outstanding $415,000 of Bonds of 1965 of said City, including provisions made for the receipt, custody and application of the proceeds of said Bonds; for the operation of said sewer system on a revenue-producing basis; for the segregation, allocation and custody of the revenues derived from the operation of said system; for the enforcement and payment of said Bonds; and all other covenants for the benefit of bondholders set out in said 1965 Bond Ordinance, are hereby ratified and confirmed and shall continue in force and inure to the security and benefit of the $1,340,000 of Bonds of 1974 herein authorized, the same as if such provisions and proceedings were herein set out in full; provided that the amounts of the revenues and income to be paid into the "Bond Fund of 1974" during the respective fiscal years shall be sufficient to pay when due the principal of and the interest on all of said outstanding $415,000 of Bonds of 1965 and of the $1,340,000 of Bonds of 1974 herein authorized to be issued. It is hereby determined that the minimum amount to be paid into such Bond Fund of 1974 in each month shall be increased over the amount stipulated by the 1965 Bond Ordinance, to an amount equal to at least one-sixth (1/6) of the amount of interest becoming due on the next succeeding interest payment date (January 1 or July 1) plus an amount equal to at least one -twelfth (1/12) of the amount of the principal becoming due on the next succeeding January 1 for account of the outstanding Bonds of 1965 and the $1,340,000 of Bonds of 1974 herein authorized and from time to time outstanding, plus additional amounts as follows: It is hereby recognized that in Section 9 of the 1965 Bond Ordinance, it was provided that there was created a fund within said Bond Fund of 1965, to be known as the "Debt Service Reserve", and it was further provided that there should be set aside in each month an amount equal to one -hundred twentieth (1/120) of the aggregate amount of the principal and interest on all outstanding Bonds maturing on the ensuing January 1 and July 1, computed on July 1 in each year, such amounts to be set aside monthly from the income and revenues of the system and paid into said Debt Service Reserve until there was accumulated a reserve in an amount equal to not less than the average annual principal and interest requirements on said Bonds; and it was further 554 provided in said 1965 Bond Ordinance, and is hereby further ordained, that as and when additional bonds are issued ranking on a parity with said Bonds of 1965 and 1974, pro- vision shall be made for additional payments into the Bond Fund of 1965, so as to pay the interest on and the principal of such additional parity bonds as and when the same become due, and for increasing the Debt Service Reserve within ten years from the date of issuance of such additional bonds, to an amount equal to not less than the average annual principal and interest requirements thereafter becoming due on all of the our - standing bonds, including any additional parity bonds. Accordingly, it is hereby certified that based on the interest rates applic- able to said outstanding Bonds of 1965, and based upon a tentatively estimated interest rate of 5-3/4"-, per annum on the Bonds of 1974, the total minimum monthly amounts which shall be set aside and paid into the Bond Fund in each month shall be increased over the monthly amount required by the 19G5 Bond Ordinance to a total minimum monthly amount equal to one-sixth (1/6) of the average amount of interest becoming due on the next succeeding interest date, plus approximately one -twelfth (1/12) of the amount of princi- pal (if any) becoming doe on the next succeeding January first with reference to both the Bonds of 1965 and the Bonds of 1974. There shall further be set aside into the Debt Service Reserve beginning as of April 1, 1974, the total sum of not less than an amount equal to one -hundred -twentieth (1/120) of the aggregate amount of the principal and interest on all outstanding Bonds of 1965 and 1974 (and any additional parity bonds) maturing on the ensuing January 1 and July 1, computed immediately after the sale of the Bonds of 1974, and on July 1 of each year thereafter, all as required dy_Ahe 1965 Bond Ordinance); and said increased monthly deposits per month shall continue to be made until there has been accumulated and there is being maintained in said Debt Service Reserve, the aforesaid total minimum Debt Service Reserve specified in the 1965 Bond Ordinance. No further payment need be made in said Bond Fund and Debt Service Reserve whenever and so long as such amount of the Bonds of 1965 and 1974, and any parity bonds, shall have been retired that the amounts then held in such funds are equal to the entire amount of interest and principal that will be payable to and at the time of the retirement or maturity of all of the bonds then remaining outstanding. In accordance with Sections 9D and 11 (iii) (2d) of said 1965 Bond Ordinance, and in accordance with the recommendations of the Engineers, the amount required to be accumulated in the Sewer Depreciation and Extension Fund (the "Depreciation Fund"). t� as the Depreciation Reserve Fund, is hereby required to be increased from $200,000.00 to the total sum of at least $250,000.00; and the monthly deposits into the Depreciation 'i i' 555 Fund out of the balance of the annual income and revenues remaining in the Revenue Fund after provisions for the deposits into the Bond Fund (and Debt Service Reserve) have been complied with, shall be increased from $2,000.00 per month to $4,000.00 per month (or so much of the amounts in the Revenue Fund as are available), which amounts shall be so deposited each month until there has been accumulated in said Depreciation Fund, said sum of at least $250,000.00, which shall be maintained, and when necessary, similarly restored to such amount. Provided further that as set out in Section 9 of said 1965 Bond Ordinance and in Section 10 below, said Debt Service Reserve shall be similarly increased if and whenever future parity bonds are issued so as to accumulate within ten years from the issuance of any future parity bonds in said Debt Service Reserve a reserve in an amount equal to not less than the average annual principal and interest requirements becoming due thereafter on all outstanding Bonds, including such additional parity bonds. SECTION 10. PROVISION PERMITTING ADDITIONAL PARITY BONDS. The Bonds of 1974 authorized to be issued hereunder and from time to time outstanding shall not be entitled to priority one over the other in the application of the income and revenues of said system, regardless of the time or times of their issuance, it being the intention that there shall be no priority among the Bonds of 1974 authorized to be issued under the provisions of this Ordinance, regardless of the fact that they may be actually issued and delivered at different times, and provided further that the lien and security of and for any bonds or obligations hereafter issued that are payable from the income and revenues of the system shall, except as set out herein, be subject to the priority of the Bonds of 1965 and 1974, as may from time to time be outstanding; provided the City has in said 1965 Bond Ordinance reserved the right and privilege, and does hereby reserve the right and privilege, of issuing additional Bonds from time to time payable from the income and revenues of said system ranking on a parity with the Bonds of 1965 and with the Bonds of 1974, but only under the conditions specified in Section 11 of said 1965 Bond Ordinance, which conditions are hereinafter repeated, taking into account the issuance of the Bonds of 1974, as follows: The City of Paducah further reserves the right and privilege of issuing additional parity bonds ranking on a parity with the Bonds of 1965 and the Bonds of 1974, in order to pay the cost (not otherwise provided) for future extensions, additions and/or improvements from time to time to said municipal sewer system, provided as follows; (1) The facility or facilities to be built from the proceeds of the additional parity bonds is or are made a part of the sewer system 556 (2) (3) (4) and its or their revenues are pledged as additional security for the additional parity bonds, the outstanding Bonds of 1965 and 1974, and of any additional parity bonds; The City is in compliance with all covenants and undertakings in connection with all of its Bonds then outstanding and payable from the revenues of the sewer system or any part thereof; and The annual net revenues, defined as gross sewer service revenues less Operating Expenses (as defined in Section 10(E) of the 1965 Bond Ordinance) of the system for a period of twelve (12) consecu- tive months in the period of eighteen (18) months immediately preceding the issuance of additional parity bonds, are certified by an independent state -licensed Certified Public Accountant, not employed by the City on a monthly salaried basis, to have been equal to at least one and one-fourth (1.25) times the average annual requirements for principal and interest on all Bonds then outstanding and payable from the revenues of the system, including the Bonds of 1965, the Bonds of 1974, any additional parity bonds then outstanding, and the parity bonds then proposed to be issued; provided, however, that for the purposes of showing compliance with the requirements of this subparagraph, such showings of the Accountant may be adjusted by an Engineer, or firm of Consulting Engineers of national reputation in the field of sanitation engineering: (a) to reflect any increased sewer service rates made effective prior to the issuance of such parity bonds; and (b) to reflect any additional net sewer service revenues which will be produced through the operation of the extensions, additions and/or improvements to be financed in whole or in part through the application of the proceeds of the proposed parity bonds, taking into account any increase or decrease of the costs of operating and maintaining the system incident thereto; provided that the adjustments permitted by this subparagraph (b) may be made only in the event that prior to the issuance of such parity bonds the City shall have entered into firm contracts establishing that the costs of the proposed extensions, additions and improvements will not exceed the cost figures used by the Engineers in making such computations. The interest payment dates on such additional parit 557 on January 1 and July 1, and the principal maturity date of each year of maturity shall be January 1. At the time of issuance of such additional parity bonds, all payments required by the 1965 Bond Ordinance and in this 1974 Bond Ordinance to be made in certain funds created in the 1965 Bond Ordinance shall be adjusted as therein provided, including (f) the accumulation of the required Debt Service Reserve to an amount not less than the average annual debt service on all Bonds outstanding, within a period of not more than ten years from the time of issuance of such parity bonds, and (H) the adjustment of the reserve in the Depreciation Fund in order to accumulate a reasonably increased Depreciation Reserve Fund, to be determined upon competent, professional engineering advice and guidance, as provided in Section 11(iii)(2d) of the 1965 Bond Ordinance. The additional parity bonds authorized by this Section shall be under- stood to mean bonds payable from the income and revenues of said system, ranking on a parity with the Bonds of 1965 and 1974, and shall not be deemed to include, nor to prohibit the issuance of, other obligations, the security and source of payment of which are subordinate and subject to the priority of the required payments into the various funds for the account of the Bonds of 1965, 1974, or parity bonds. Except as permitted and provided in this Section, the City shall not, so long as any of the Bonds of 1965, 1974, or any parity bonds, are outstand- ing, issue any additional bonds payable from the revenues of said system unless the lien or pledge or the revenues or other security to secure such additional bonds is made inferior and subordinate in all respects to the security of the Bonds of 1965 and 1974 and any parity bonds. SECTION 11. SALE OF BONDS. The entire $1,340,000 of Bonds of 1974 authorized herein shall be offered for sale, which shall be publicly advertised, upon the basis of sealed, competitive bids, which shall be publicly opened and acted upon by the Board of Commissioners; to that end, the City Clerk is authorized to sign an appropriate form of Notice soliciting purchase bids, and to cause the same to be published in conformity with Chapter 424 of the Kentucky Revised Statutes, at least one time, not less than seven days nor more than twenty-one days, prior to the designated sale date, in (a) the SUN -DEMOCRAT, which is the newspaper having the largest circulation which is published in the City of Paducah and in McCracken County, Kentucky, and is the newspaper published in said City meeting the requirements of KRS 424.110-120 for 558 publication of official actions of the City of Paducah, Kentucky, (b) in THE COURIER - JOURNAL, a daily newspaper published in Louisville, Kentucky, and having general circulation throughout the Commonwealth of Kentucky, and (c) in THE BOND BUYER, a financial publication published in New York City, New York, and of general circulation among bond issue purchasers. The published Notice shall be in customary form or forms, shall identify the Bonds offered for sale, shall designate a day and hour for the receiving and public opening and consideration of purchase bids, which time will be the time of a regular, adjourned regular or called, special meeting of the Board of Commissioners, as may be determined by the Board of Commissioners or by the Mayor. Bidding requirements shall be as follows: (a) Bids will be considered only for the entire $1,340,000 of Bonds of 1974 and none other; (b) Bids shall be upon terms of cash at not less than $1,319,900 (98-1/2% of par value) plus accrued interest to the date of delivery; (c) Bidders shall stipulate an interest coupon rate or rates in multiples of 1/8% or 1/10%, not exceeding 12 different rates, repetition of a rate not to be considered a different rate; (d) No interest coupon rate shall exceed 7% per annum; (e) There shall be no more than 2% differential between the highest and lowest interest rates bid; and (f) All Bonds of the same maturity shall bear the same and a single interest coupon rate from the date thereof to maturity and interest becoming due on any interest payment date may not be represented by more than one coupon on any Bond. The Bonds will be awarded to the bidder (s) offering to purchase the Bonds at the lowest net interest cost to the City, such cost to be determined by adding the total amount of any discount bid (below par) to the aggregate amount of interest upon the Bonds, computed from April 1, 1974, to their respective stated maturities. The City shall reserve the right to reject any or all bids and to waive any informality or irregularity in the bidding. Suggested forms of a "Notice of Bond Sale," the "Official Terms and Conditions of Sale of Bonds," and the 'Bid Form," having been prepared and submitted, by Bond Counsel, and the same having been examined by the City Council and found to be in order, the same are hereby approved and may be used for the purpose of this Section. 559 SECTION 12. DISPOSITION OF PROCEEDS. Whenever the $1,340,000 of Bonds authorized herein shall have been sold and delivered, there shall forthwith upon delivery and payment for said Bonds, out of the Bond proceeds, be deposited into the "Paducah Sewer System Bond and Interest Redemption Fund", all sums received as accrued interest from the purchaser, repre- senting accrued interest from April 1, 1974, to the date of delivery. From the remaining proceeds of the sale of such Bonds of 1974, there shall next be deducted and paid any and all expenses incident to the issuance, sale and delivery of such Bonds of 1974, including the fee of the Fiscal Agent, J. J. B. Hilliard, IV. L. Lyons, Inc., 545 South Third Street, Louisville, Kentucky 40202, and such other appropriate expenses as may be approved by the Board of Commissioners. The balance of said proceeds shall be deposited separate and apart from all other municipal funds into a separate construction account at The Citizens Bank & Trust Company, Paducah, Kentucky, to be disbursed for the purpose of paying the costs of the construction of said 1974 construction project. To the extent.that the City shall have found it necessary and possible to expend funds for various items of construction costs relating to said 1974 construction project prior to the issuance, sale and delivery of said Bonds, the aggregate of all of such expenditures may be reim- bursed to said City from the proceeds of the sale of the Bonds of 1974, upon orders of the Board of Commissioners of the City, with the written approval of the Engineers for the City. Pending expenditure of such remaining proceeds for such purpose, such remaining proceeds shall be deposited in a special construction account at the Citizens Bank & Trust Company, in the City of Paducah, Kentucky, said account at said Bank to be called "City of Paducah Sewer System Construction Account of 1974." Said deposit in said bank, to the extent that same may cause the aggregate deposits of said City in such bank to be in excess of the amount insured by the FDIC, shall be collaterally secured by obligations of the United States of America, its agencies and/or instrumentalities, having a market value equivalent to such deposit, or such Bank may invest for the benefit of such account whatever portion of such account is designated by the Mayor of the City, in such United States obligations, maturing at such time or times as to make such funds available when needed for construction purposes, in accordance with KRS 66.480. Payment from said Construction Account for costs in connection with said 1974 construction project, shall be made only upon vouchers approved by the Engineers having charge of supervising such construction, said Engineers to certify in each instance that the voucher represents a sum actually earned by and due to the proposed 560 payee under a contract with said City for work performed and/or materials furnished in connection with said construction project, or represents a sum necessary to be expended for land and/or rights of way necessary to be acquired by the City in connection with said construction project, provided all checks drawn against said Construction Account shall be signed by the City Treasurer of the City, countersigned by the Mayor or the City Manager, and accompanied by such voucher before being honored by the payee Bank. The aforementioned officials are hereby authorized to execute such checks from time to time, in the necessary amounts, upon the aforesaid certification being executed by the Engineers and presented to them, or to their duly authorized agents or representatives, without the necessity of any further meetings, authorizations, ordinances or motions by the Board of Commissioners of the City. Such checks shall be fully negotiable, and the aforesaid Bank shall be authorized to honor and pay the same, if said certification of the Engineers is attached thereto, provided said Bank assumes the responsibility for the propriety of all endorsements, or if all endorsements to it are guaranteed by another responsible bank. No expenditure shall be made from the Construction Account except for proper and authorized expenses relating to the construction of said 1974 construction project in accordance with the plans and specifications approved by the City, for which construction contracts have been awarded by the City to insure the completion of said construction project. Pending disbursement for the authorized purposes, the proceeds of the Bonds of 1974 shall be subject to a first and paramount lien and charge in favor of the holder or holders of the Bonds of 1974, and for their further security. After the Engineers certify that the construction of said 1974 construction project has been completed and paid for, any surplus then remaining shall automatically and mandatorily be transferred to the Debt Service Reserve, without the necessity of any further certification by the Engineers. SECTION 13. LIMITATION ON INVESTMENT OF FUNDS. The City covenants that sums derived from the 1974 construction project and deposited in the funds referred to herein shall not be invested in investments which will produce a net adjusted yield which is more than one-eighth percent in excess of the net interest cost (effective yield) of the Bonds of 1974,.if such investment would cause such Bonds to be treated as taxable "arbitrage bonds" within the meaning of Section 601(a) of the Tax Reform Act of 1969 (83 Stat. 656) and the Income Tax Regulations issued thereunder; provided, however, that funds may be invested to whatever extent and whenever such Act and/or Regulations permit same to be made VI without causing the Bonds to be treated as taxable "arbitrage bonds". i 561 On the basis of the facts and circumstances in existence on the date of adoption of this Bond Ordinance, the City certifies that it is not expected that the proceeds of the Bonds will be used in a manner which would cause such Bonds of 1974 to be arbitrage bonds. The City covenants to the purchasers and/or holders of the Bonds of 1974 that (a) the City will make no use of the proceeds of said Bonds which, if such use had been reasonably expected on the date of issue of such Bonds, would have caused such Bonds to be arbitrage bonds, and (b) that the City will comply with (1) all of the requirements of Sections 103(d) of the Internal Revenue Code; and (2) all of the requirements of the applicable Income Tax Regulations issued thereunder, to whatever extent is necessary to assure that the Bonds of 1974 shall not be treated as taxable arbitrage bonds. The City covenants and reasonably expects: (a) That the City has entered into a contract for engineering services for the construction project financed by the Bonds of 1974, and the fees to be paid to such Engineers will exceed 2-1/2% of the total cost of the project; (b) that work on the construction project has commenced or will commence within six months from the date of issuance of the Bonds; (c) that the construction of said construction project will proceed thereafter to completion with due diligence on the part of the City; (d) that at least 85% of the spendable proceeds of the Bonds will be expended on the costs of said construction project within less than three years from the date of issuance of the Bonds; (e) that the sewer system will not be sold or otherwise disposed of, in whole or in part, prior to the last maturity of the Bonds; (f) that there has been no overissuance of the Bonds; (g) that the original proceeds of the issue will not exceed by more than five percent (5%) (or by any percent) the amount required for the costs of the construction project; (h) that the City has not been advised of any listing or contemplated listing by the Internal Revenue Service determining that said certification with respect to its obligations may not be relied upon; and accordingly it is anticipated that there will be no limitation on the permissible yield on investments made from the proceeds of the Bonds. Prior to or at the time of delivery of the Bonds, the City Treasurer is authorized to execute the appropriate certification with reference to the matters referred to above, setting out all known and contemplated facts concerning such antici- pated construction, expenditures and investments, including the execution of necessary and/or desirable certification of the type contemplated by the "Proposed Arbitrage Regulations" as published in the Federal Register on May 3, 1973 (26 CFR, Part 1), in order to assure that interest on the Bonds of 1974 will be exempt from all Federal 562 income taxes and that the Bonds will not be treated as taxable arbitrage bonds. SECTION 14. CONTRACTUAL NATURE OF ORDINANCE. The provisions of this Ordinance shall constitute a contract between said City and the holders of the Bonds of 1974, and after the issuance of any of the Bonds of 1974, no change, variation, or alteration of any kind, in the provisions of this Ordinance shall be made in any manner, except with the consent of two-thirds (2/3) of the holders of the Bonds of 1965, 1974, and any additional parity bonds, or 2/3 of the amount of such Bonds held by the holders of those present at a meeting called for that purpose, as specified in Section 12 of the 1965 Bond Ordinance, until such time as all of said Bonds of 1965, and 1974, and the interest thereon, have been paid in full. SECTION 15. PROVISIONS IN CONFLICT REPEALED. All ordinances, resolutions and orders, or parts thereof, in conflict herewith are, to the extent of such conflict, hereby repealed, and it is hereby specifically ordered and provided that any proceedings heretofore taken for the issuance of other bonds payable or secured in any manner by all or any part of the income and revenues of said sewer system, or any part thereof, and which have not heretofore been issued and delivered, are hereby revoked and rescinded, and none of such other bonds shall be issued and delivered. SECTION 16. SIGNATURES OF OFFICERS. If any of the officers whose signatures or facsimile signatures appear on the Bonds of 1974, or coupons, cease to be such officers before delivery of the Bonds, such signatures shall nevertheless be valid for all purposes the same as if said officers had remained in office until delivery, as provided in KRS 96.390 and RMS 61.390. SECTION 17. SEVERABILITY CLAUSE. If any section, paragraph, clause, or provision of this Ordinance shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 18. EFFECTIVE DATE OF ORDINANCE. This Ordinance shall be introduced at a meeting of the Board of Commissioners and remain on file for at least one week for public inspection inthe completed form in which it shall be put upon its final passage and if adopted shall be in full force and effect ten days thereafter. Introduced by the Board of Commissioners April 9, 1974 Passed by the Board of Commissioners April 16, 1974 Recorded by Sarah Thurman, City Clerk, April 16, 1974.